An Open Letter From Six Nobel Laureate Economists About The GOP Bill

 

From the Economic Policy Institute

Five Areas Economists Will Be Watching In 2025

 

The economy is good right now (although it could be fairer). With Trump as president the economy won't get any fairer, but it could get worse. Here are five areas that economists will be watching in 2025:

1. Tariffs

Trump’s plans to impose sweeping tariffs are likely to be one of the biggest threats to the economy, experts say.

The president-elect has vowed to penalize the country’s largest trading partners by levying tariffs — an extra 10 percent on Chinese goods and 25 percent on imports from Mexico and Canada — that economists say could quickly raise prices. The necessities that could soon be getting costlier range from big-ticket items such as cars and appliances to everyday basics like groceries and gas. During his campaign, Trump also discussed sweeping tariffs on all imports, not just from those countries, which would affect even more goods if implemented.

“Tariffs make things more expensive,” Alex Durante, an economist at the Tax Foundation, a right-leaning think tank, told The Washington Post. “They shrink the economy, and they make people poorer.”

2. Deportations

A recent surge in immigration has helped power economic growth and boost the job market. But economists say Trump’s plans to deport millions of undocumented migrants and curb immigration more broadly could hobble the labor market.

3. Tax cuts

The sweeping tax cuts Trump signed into law in his first term are set to expire at the end of 2025. Those will “almost certainly” be extended, according to Howard Gleckman, a senior fellow at the Tax Policy Center.

The gains, though, would be concentrated at the top: The wealthiest Americans would see the largest gains, with families making over $450,000 reaping nearly half the benefits if existing tax cuts are extended, according to an analysis by the Tax Policy Center.

4. Inflation

The Federal Reserve has made strides in bringing down inflation with a series of aggressive interest rate hikes. But lately, progress has stalled, and economists say it could unravel even further next year if Trump moves forward on some of his more draconian tariff and immigration plans.

Deutsche Bank estimates that one measure of inflation — now at 2.8 percent — could rise to as much as 3.9 percent next year if the new tariffs are enacted, up from original estimates of about 2.5 percent.

5. Stocks

During his last term, Trump routinely boasted about the stock market’s performance, which reached new highs under his watch. But economists say a repeat performance may be tough to pull off.

Stocks have continued their ascent under Biden, with all three major indexes — the S&P 500, Dow Jones Industrial Average and Nasdaq composite index — hitting all-time highs in recent weeks. That’s boosted the portfolios of the country’s wealthiest, allowing them to keep spending in a way that’s powering the economy.

But the market’s heyday may soon be coming to an end: Stocks tumbled after the Federal Reserve suggested in mid-December that it is rethinking how often it will cut interest rates next year. And economists warn that any additional curveballs, including government policies that hamper growth, could quickly reverse recent gains.

Economists Say Trump Policies Will Cause More Inflation Than Harris Policies

 The following is part of a post by Zeeshan Aleem at MSNBC.com: 

Much of the Republican case against a Kamala Harris presidency has rested on the claim that she’s responsible for — and would continue — policies that caused eye-watering inflation for people during the Biden administration. But a new survey of economists, conducted by The Wall Street Journal, finds that most economists believe that former President Donald Trump would pursue a more inflationary policy regime.

The Journal polled 50 economists as to whether they believed Harris’ or Trump’s proposed policies would cause higher inflation and found that 12% said Harris and 68% said Trump, while another 20% responded there would be no material difference between the two. Nobel Prize-winning economist Paul Krugman described the coalescing around Harris as less likely to produce high inflation as “as close to unanimity as the profession gets.”

More striking still: That survey represented a broader consensus pinning higher inflation on Trump than an earlier version of the survey in July, which compared Trump with Biden, since Biden was still the expected Democratic nominee at that time. In that earlier poll, 16% of economists said Biden would cause higher inflation, 56% answered Trump, and 27% said it would make no material difference. 

These survey results are damning for Trump, whose main pitch to voters outside of his diehard base is that his economic record is stronger than Biden and Harris’ — and that he alone can bring down high prices. And yet, the more economists are hearing about his plans, the more they’re convinced he’s more likely to cause prices to surge. . . .

The Journal’s poll is good news for Harris. Now a key task of the campaign is to make sure that ordinary citizens — especially the coveted low-information swing voter — understand that she should be the obvious preference for people worried about how expensive everything is

Nobel Prize Economists Say Biden Better For The Economy

 

This is a public letter from 13 economists -- all of them winners of the Nobel Prize for economics. They agree that Joe Biden's policies would be better for the economy than Donald Trump's. 

The GOP Prefers Charlatans When It Comes To Economics

In his column in The New York Times, Nobel Prize-winning economist Paul Krugman gives us an interesting and thought-provoking op-ed on economists -- liberal and conservative.

Here is some of what he had to say:

Do economists’ political preferences shape their research? They surely affect the choice of subject: Liberals are more likely to be interested in rising inequality or the economics of climate change than conservatives. And human nature being what it is, some of them — O.K., of us — occasionally engage in motivated reasoning, reaching conclusions that cater to their politics.

I used to believe, however, that such lapses were the exception, not the rule, and the liberal economists I know try hard to avoid falling into that trap, and apologize when they do.

But do conservative economists do the same? Increasingly, the answer seems to be no, at least for those who play a prominent role in public discourse.

Even during the Obama years, it was striking how many well-known Republican-leaning economists followed the party line on economic policy, even when that party line was in conflict with the nonpolitical professional consensus.

Thus, when a Democrat was in the White House, G.O.P. politicians opposed anything that might mitigate the costs of the 2008 financial crisis and its aftermath; so did many economists. Most famously, in 2010 a who’s who of Republican economists denounced the efforts of the Federal Reserve to fight unemployment, warning that they risked “currency debasement and inflation.”

Were these economists arguing in good faith? Even at the time, there were good reasons to suspect otherwise. For one thing, those terrible, irresponsible Fed actions were pretty much exactly what Milton Friedmanprescribed for depressed economies. For another, some of those Fed critics engaged in Donald Trump-like conspiracy theorizing, accusing the Fed of printing money, not to help the economy, but to “bail out fiscal policy,” i.e., to help Barack Obama.

It was also telling that none of the economists who warned, wrongly, about looming inflation were willing to admit their error after the fact.

But the real test came after 2016. A complete cynic might have expected economists who denounced budget deficits and easy money under a Democrat to suddenly reverse position under a Republican president.

And that total cynic would have been exactly right. After years of hysteria about the evils of debt, establishment Republican economists enthusiastically endorsed a budget-busting tax cut. After denouncing easy-money policies when unemployment was sky-high, some echoed Trump’s demands for low interest rates with unemployment under 4 percent — and the rest remained conspicuously silent.

What explains this epidemic of bad faith? Some of it is clearly ambition on the part of conservative economists still hoping for high-profile appointments. Some of it, I suspect, may be just the desire to stay on the inside with powerful people.

Over 1100 Economists Oppose Trump's Economic Policy

The letter above is an open letter to Donald Trump warning him about his disastrous new economic policy that uses tariffs to threaten other nations. The letter was signed by over 1100 economists. They warn Trump that this same policy was initiated in 1930, and it led to an economic disaster (the Great Depression).

You can go here to download the full list of economists who have signed the letter.

Economists Say GOP Tax Plan Will NOT Grow The Economy

(Cartoon image is by Jack Ohman in the Sacramento Bee.)

Donald Trump, and his Republican cohorts in Congress, still claim that their tax plan (which gives massive cuts to the rich and to corporations) will grow the economy (producing jobs and raising wages). The problem is that tax cuts have not done that in the past, and economists say it won't do it this time either. The following is part of an article by Rebekah Entralgo at Think Progress:

Overhauling the tax code before Christmas would be a difficult task under “normal” conditions, yet Republicans in Congress are pledging to do just that with their tax bill.

There’s just one big problem: It is a supremely poor tax plan that doesn’t provide middle-class tax relief while also serving as a substantial handout to the wealthy.

A University of Chicago survey released Tuesday polled 42 of the nation’s leading economists about the Republican tax plan — and all but one said they do not agree with claims that the plan will grow the economy.

This survey is yet another piece of analysis that eviscerates a popular White House talking point that by cutting taxes for corporations, the GOP tax plan would create so much economic growth that the average American family would get a raise of about $4,000 dollars.

Earlier this week, analysis from the non-partisan Tax Policy Center found that, despite claims from White House officials like chief economic adviser Gary Cohn, the tax cuts will not pay for themselves through growth. In total, the House bill would yield around $169 billion in additional tax revenue, nowhere near enough to cover the roughly $1.5 trillion in revenue loss from a corporate tax cut.

This University of Chicago survey echoes another survey conducted by the institution in May. Back then, 35 out of 37 economists believed the Trump tax cuts wouldn’t pay for themselves; the other two didn’t understand the question.

Trump's Proposed Budget Is "A Collection of Lies"

(This photo of Joseph Stiglitz, from Wikipedia, is by Peerapat Wimolrungkarat.)

I have posted about Donald Trump's proposed budget several times. I believe it would be disastrous for this country if enacted. I am not alone in that opinion.

The following is part of an interview Amy Goodman (at Democracy Now) had with Joseph Stiglitz (Nobel Prize-winning economist and Columbia University professor).

AMY GOODMAN: Can you respond to the budget that’s just been revealed?

JOSEPH STIGLITZ: It’s like everything else: It’s made up. You could say it’s a collection of lies put together. It doesn’t make any economic sense. I don’t think anybody who’s looked at it has—can fathom the economics. I mean, you mentioned one thing, the 3 percent growth rate, which is the largest deviation in estimate relative to the CBO on record. You know, when I was chairman of the Council of Economic Advisers, we wanted to be responsible, and we always were conservative and were very careful, getting the views of everybody, wanted to make sure that our numbers were reasonable. He’s made no pretense to be reasonable.

In fact, what’s striking is, while he assumes that there’s going to be more growth, if you look at the budget, it’s designed to reduce growth. He cuts out support for science, for R&D, which is the basis of productivity growth. He cuts out support for job retraining, so when people leave one job, they can be trained for the next job. He cuts out support for Pell grants, so those who have low income can get the education so they can live up to their potential. All these are things that actually lower economic growth. So I would say this is not a growth budget, this is a no-growth budget.

And then he has the numbers, you know, the gall to have things like—you know, just mind-bending. He says he’s going to—elsewhere, he said he’s going to eliminate the estate tax. And his budget says that he’s going to raise several hundred billion dollars’ more money from an estate tax that is zeroed out. Now, you can make a statement that if we lowered the estate tax a little bit, maybe people will be induced to die more, and maybe we’ll get more revenue. You could make that kind of statement. But one thing you don’t need a Ph.D. is, zero times any number is zero. So if you have a zero estate tax, no matter how many people are dying and how wealthy they are, you’re going to get zero revenue.

And remember, what he’s doing, he’s cutting out the estate tax that benefits 0.2 percent of the economy—of our society. You know, you have to have an estate of more than 10 million, if you’re a married couple, in order to pay anything on the estate tax. And meanwhile, he’s cutting benefits for ordinary Americans—education, health, as you mentioned, food, nutrition. It’s not just the system of social protection that we’ve created, but even the bottom safety net that is—catches people when they’re in trouble. . . .

AMY GOODMAN: So, he has said, when he was campaigning—actually, he was campaigning against other Republicans when he made the point, "I’m not going to cut Medicare, Medicaid or Social Security." I mean, we had endless choices of clips to choose from. Joe Stiglitz?

JOSEPH STIGLITZ: He lied. He is cutting Medicaid, the largest cut to Medicaid, even beyond what was in his repeal and replace, that didn’t get very far. These are even bigger Medicaid cuts. In terms of so Social Security, one important part of Social Security is disability payments.

AMY GOODMAN: SSDI.

JOSEPH STIGLITZ: And, you know, that’s really important. People do get to say, well, they have auto accidents, they get sick, they get cancer—you know, all kinds of things that make them unable to work.

AMY GOODMAN: They get hurt at work.

JOSEPH STIGLITZ: They can’t work. And he’s cutting that. It’s an important part of our Social Security, of security that people—we provide, as a society, as a basic system of social protection. He’s cutting back on those expenditures. So, all I can say is, you look at that clip, and what he’s doing today is just the opposite.

AMY GOODMAN: So you’re talking about cutting—I mean, already the proposed budget from the House was massive when it came to cuts, something like $880 billion in Medicaid cuts. He’s suggesting $616 more billion—$616 billion more, which would basically gut Medicaid.

JOSEPH STIGLITZ: That’s right. And remember, it’s not just for poor people. It’s a major problem for our elderly, who have to go into old age homes, hospice, you know, all—so, it is an extraordinarily important program. Another way of seeing the massiveness of these cuts is that, if you look at what we call a non-defense discretionary—that is to say, you take out Social Security, you take out Medicare, and you take out military—he’s proposing a 40 percent cut in all these programs. And remember, these programs have been cut year after year for the last 25 years, under both Democrats and Republicans, so it’s not like there’s a lot of fat on this. These are already fairly lean. And what he’s doing is just taking an ax to them, a 40 percent reduction. . . .

AMY GOODMAN: This would drastically shrink low-income student loan program.

JOSEPH STIGLITZ: Oh, some of the programs would be wiped out. So, you know, the American dream, we’ve gradually understood, is really a myth, the fact that anybody can go from the bottom to the top. This is, what is remnant of that American dream, he’s saying, "I’m going to hit it with a sledgehammer.". . .

AMY GOODMAN: Under Trump’s budget, the Environmental Protection Agency faces a 31 percent cut, the steepest cut of any agency or department across the government. . . .

JOSEPH STIGLITZ: Well, you know, of course, every government program has the worst thing. The financial sector and the private sector makes a mistake. Remember we had a crisis in 2008? That was a misallocation of trillions of dollars. So, I don’t want to pretend that every program is perfect. But if you get rid of environmental protection, we’re going to be suffering from dirty air, dirty water, toxic waste, that lower our health. And here’s the point. He wants faster economic growth. A less healthy America is not going to be as productive.

AMY GOODMAN: And the massive increase in military spending? I mean, you’ve written books about this, about the wars and what they cost us.

JOSEPH STIGLITZ: That’s right. And we’re fighting, we might say, a war on terrorism. But another aircraft carrier is not going to win—help us in the war on terrorism. You know, the Cold War, that fight with Russia, in the form that it was, ended a quarter-century ago, and yet we’re spending money as if it hasn’t ended. So we’ve been spending lots and lots of money on weapons that don’t work, against enemies that don’t exist. If he used that criteria that he said for shutting down a department, the Defense Department would have been shut down long ago. You know, the $1,000 toilet, the hammers that cost $100 or things like that—if we used the criteria of misspending, the Defense Department is illustration number one.

Economists Agree: Trump Tax Plan Will NOT Pay For Itself

The charts above are from a recent University of Chicago School of Business survey released on May 2nd. They asked 37 respected economists two questions. A) Do large tax cuts result in a drop in government revenue? And especially, Will the Trump tax cut pay for itself through enhanced economic growth?

They agreed that tax cuts do result in less government revenue, and that the Trump tax cut would NOT pay for itself by stimulating massive economic growth. That was the opinion of 35 of the 37 economists. And after the poll was released, the other two economists said they had misunderstood the questions. They actually agreed with the other 35 economists.

Trump wants to give himself, his rich friends and family, and his corporate buddies a massive tax cut -- and to do that, he is lying to the American people about what that tax cut will do for the economy. His cut will not pay for itself, will not cause huge economic growth, and will not create millions of new jobs. It will simply balloon the federal deficit and national debt.

His claims are just more "trickle-down" lies.